The First Real Test for Digital Gold

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    Anyone following the worlds financial markets will know things have not been going too well just lately! To put it mildly, the threat of the Corona virus has sent major indices across the globe into a bit of a tailspin, wiping away billions of dollars in value along the way. In-fact, the Dow Jones had its largest ever single daily fall during this period at the end of February which is testament to the kind of panic that’s been witnessed!

    paper trading stressed out woman
    Don’t panic, don’t panic!

    Given this situation it would be reasonable to assume the price of gold would start to accelerate, after all, it is often cited as a good investment when times get a bit crazy and the fallout from Corona virus certainly meets this definition.

    Bitcoin vs Gold during the Corona Virus Panic

    Looking at the price of gold throughout February 2020 it is clear there has (of course) been an uptrend, nothing surprising here, especially given the markets were already showing signs of a wobble early on in the month which only continued to get worse.

    gold price during february corona virus panic
    Gold Price, (£) per Gram

    But this is all very predictable and not really all that interesting, what is interesting (for me at least) is how Bitcoin has weathered this same storm! The fact is, having been born after the last big financial crash (of 2008) and having only become widely popular a good 5+ years later it is safe to say we have yet to witness Bitcoin during a major, worldwide crash as of yet!

    Here’s the thing with Bitcoin, it is very divisive, some people love it and say it is the future of money, others hate it and liken it to a scam. Whatever you think of it the facts are it exists and people do (for whatever reasons) demand it, whilst ever it continues to function in some form there will always be a price attached to a Bitcoin and it is this price during these crazy times that I am interested in!

    bitcoin price during feburary corona virus panic
    Bitcoin Price

    Now, I’m not some kind of financial charting wizard, drawing lines all over the place but it is clear at just a glance of these charts that Bitcoin has handled this period pretty well I think! Sure, it has lost a little value over the month and there is clearly a bit of a drop around the 24th but overall not too bad!

    Additionally, if you look at the right side of the Bitcoin chart going into the early days of March there is evidence of a bit of an uptake again in the cryptocurrency, signs people are still demanding this asset despite the news of the Corona virus (seemingly) continuing to get ever worse.

    ftse100 price during corona virus panic feb 2020

    The graph above shows the FTSE 100 index during most of February going into March, clearly the stock markets (worldwide) have ben hit quite hard the last few weeks! This hit helps form an interesting comparison in that the FTSE 100 has performed (roughly) similar and maybe even slightly worse than Bitcoin has the same period. If nothing else it would be reasonable to say had you invested everything in Bitcoin versus the FTSE 100 during this time you losses from Bitcoin would be similar or maybe even slightly less than in the stock market.

    Why Does any of this Matter

    So what is the point of all of this, you could argue that there has been a crash, gold has gone up, everything else has been sold off and there are now some very cheap shares available. This would of course be true, but it would also be missing the fact that Bitcoin has handled its first big “financial crash” pretty well, and this could be very important going forwards!

    bitcoin gold coins

    One of the biggest problems with Bitcoin (as an investment) to date is there are a lot of risks associated with it, it could all potentially disappear tomorrow, be “hacked” to a point where it no longer functions or subject to a myriad of other weird and wonderful scenarios which could result in investors loosing everything.

    And all of the above risks would still strand, of course, but the main point is when everything starts to settle down with the Corona virus panic it will become clear that Bitcoin has weathered the storm pretty well and will (in many ways) have proved itself against a financial meltdown and increased its worth in the process.

    With all of the problems it faces still very much relevant any chance Bitcoin has to prove its stableness is very much a victory (and currently a very overlooked one at that). As of now, as I keep an eye on the major news networks and websites no one else has (in any real depth) noticed this relative stability and as such it still seems to fly under the radar. The potential is therefore here, perhaps, for a very strong Bitcoin in the second half of 2020 when all of the craziness has dies down and the appetite for holding some Bitcoin grows ever more realistic for many?

    And moreover, with all of the pitfalls factored in Bitcoin still has the potential to go to massive new heights quicker and faster than anything the world has ever seen before. This relative stability on show will mean more people will be tempted to invest and the roller-coaster will continue. If nothing else I think it is definitely worth having at least a small investment in Bitcoin to be in the picture if or when this explosion does happen, safe in the knowledge Bitcoin can handle a storm pretty well when it needs to.

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